Neste Announce Results for 2019

Outstanding year 2019 – Dividend proposal EUR 0.92 per share plus an extraordinary dividend of EUR 0.10 per share

Year 2019 Highlights:

Comparable operating profit totaled EUR 1,962 million (EUR 1,422 million)

Comparable operating profit contribution totaling EUR 372 million (EUR 140 million) from the retroactive US Blender’s Tax Credit (BTC) decision

Operating profit totaled EUR 2,229 million (EUR 1,022 million)

Cash flow before financing activities totaled EUR 1,154 million (EUR 870 million)

Return on average capital employed (ROACE) was 26.6% over the last 12 months (21.1%)

Leverage ratio was -3.3% at the end of December (31 Dec 2018: -1.5%)

Comparable earnings per share were EUR 2.04 (EUR 1.50)

Earnings per share: EUR 2.33 (EUR 1.01)

Board of Directors will propose a dividend of EUR 0.92 per share (0.76), totaling EUR 706 million (EUR 583 million), plus an extraordinary dividend of EUR 0.10 per share, totaling EUR 77 million

Fourth quarter in brief:

Comparable operating profit totaled EUR 781 million (EUR 349 million)

Operating profit totaled EUR 1,046 million (EUR 183 million)

Renewable Products’ comparable operating profit was EUR 671 million (EUR 281 million)

Comparable operating profit contribution totaling EUR 372 million (EUR 0 million) from the retroactive US Blender’s Tax Credit (BTC) decision

Renewable Products’ comparable sales margin, excluding BTC, was USD 684/ton (USD 715/ton)

Oil Products’ comparable operating profit was EUR 117 million (EUR 60 million)

Oil Products’ total refining margin was USD 11.4/bbl (USD 10.5/bbl)

Marketing & Services’ comparable operating profit was EUR 11 million (EUR 19 million)

President and CEO Peter Vanacker:

“Year 2019 was Neste’s best ever. We posted a record-high comparable operating profit of EUR 1,962 million, compared to EUR 1,422 million in 2018. Renewable Products exceeded the previous year’s high performance by significantly higher sales volumes, further improved sales margin, and the retroactive US Blender’s Tax Credit (BTC) decision for the years 2018 and 2019. Oil Products’ financial performance was almost at the previous year’s level in a less supportive margin environment. Marketing & Services segment’s comparable operating profit was the same as in 2018. We reached a strong ROACE of 26.6% over the last 12 months and a leverage ratio of -3.3% at the end of the year. Our cash flow before financing activities was EUR 1,154 million in 2019.

The strong financial position enables implementation of our growth strategy going forward while maintaining a healthy dividend distribution.

Renewable Products posted an outstanding full-year comparable operating profit of EUR 1,599 million (983 million). The renewable diesel market continued favorable, but feedstock markets tightened during the year. Despite higher feedstock costs, we were able to increase our average comparable sales margin by over 7% to USD 644/ton in 2019, which had a positive impact of EUR 93 million on the comparable operating profit. Our sales volumes were 2.85 million tons in 2019, more than 25% higher than in previous year. The increase in sales was enabled by a new annual production record. The capacity was increased from 2.7 to 3 million ton/a during the year as a result of successful implementation of Neste Excellence program in our operations. Higher sales volumes had a positive impact of EUR 335 million on the comparable operating profit year-on-year. Additionally, the retroactive US BTC decided for the years 2018 and 2019 had a positive impact of EUR 372 million on the comparable operating profit in the fourth quarter, compared to the EUR 140 million BTC impact for the year 2017 recorded in the first quarter of 2018. The share of waste and residues averaged at 80% of the total renewable material inputs in 2019.

Oil Products posted a full-year comparable operating profit of EUR 386 million (EUR 397 million). The reference margin, reflecting the general market conditions, and particularly the Urals-Brent price differential were quite volatile during 2019. The reference margin averaged at USD 5.8/bbl, which was approx. USD 0.4/bbl lower than in 2018. Our additional margin averaged at USD 4.7/bbl in 2019, almost at the same level as in the previous year. The additional margin was supported by our good operational performance, but burdened by a lower currency hedging result and higher utility costs compared to 2018. During the year 2019, the segment’s fixed costs were EUR 23 million lower than in the previous year due to our Neste Excellence program efforts.

Marketing & Services segment generated a full-year comparable operating profit of EUR 77 million (EUR 77 million). The divestment of the Russian operations was completed at the end of October 2019, and Marketing & Services can now focus on its core markets.

The Others segment’s full-year comparable operating profit was EUR -98 million (EUR -36 million). The significant loss was mainly due to the poor performance of the minority owned Nynas, which has been impacted by the US sanctions. As our shareholding and loan receivables from Nynas were fully written-off in the third quarter, it will not have an impact on the Others segment’s financial performance going forward.

The year 2019 was a year of growth, change and consistent strategy execution. We expanded our global reach with new offices in Düsseldorf, Amsterdam, Shanghai, and Melbourne, and strengthened our presence in Houston and Singapore.

In Singapore, we started the construction of our EUR 1.4 billion expansion project to increase our production of renewable jet fuel and other renewable products. This biggest investment in our history is on track. It will expand our annual renewable capacity by up to 1.3 million tons in Singapore, and extend our total renewable product capacity to 4.5 million tons annually in 2022.

We have entered into new markets with our renewable and circular solutions. In road transportation, Neste MY Renewable Diesel™ is now sold in all the Baltic countries, and the Netherlands and Oregon in the US, in addition to our existing offering in Finland, Sweden and California.

In our Renewable Aviation business, we have moved from feasibility study to execution and ramped up our capacity to produce up to 100,000 tons of renewable jet fuel. With further production expansion on the way, we will have the capacity to produce over 1 million tons of renewable jet fuel globally in 2022. In 2019, we also started continuous supply to Air BP, Lufthansa and KLM to support these industry players in reducing aviation-related emissions. In the Renewable and Polymers business, we have partnered with actors like LyondellBasell and Borealis to do the first-ever commercial-scale production of bio-based plastics from renewable material.

We achieved excellent financial results with the best ever process safety performance in 2019. In 2020, we will continue on our journey to become a global leader in renewable and circular solutions. In all our business units, we look forward to new and continued partnerships, collaboration and initiatives with leading companies and brand owners. We want to execute our growth strategy faster, bolder, and together.”

Source / Further information : Neste

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